VA Loan Gift Funds: What You Need to Know

Can my girlfriend/boyfriend give me money to buy a house?

Money in a gift boxThe VA allows Veterans to obtain gift money to help with the purchase of a home. There cannot be any repayment arrangements between the donor(s) and Veteran.

The gift funds transfer from the donor to the Veteran must be carefully documented. The donor and Veteran are required to sign a form that states the amount of the gift funds and declares that there are no repayment arrangements.

Who can gift funds for a VA loan?

It is possible to receive a gift toward your home purchase from almost anybody, but there is one key stipulation: the gift cannot be from someone who has an interest in the transaction.

An interested party is someone who has an interest in your transaction and is involved in it in some way, such as a builder or developer, another broker, a real estate agent, or even the seller himself. Although, sellers are permitted to provide a sales concession. You may also use gift money as part of your down payment if desired.

Friends and family members may “donate” money to the buyer in order for them to be able to afford the charges associated with the purchase. For a VA loan, however, there are specific conditions that must be met before a gift money may be used.

VA Loan Gift Funds Requirements

Any gift funds donated must be accompanied by a gift letter signed by both the donor and borrower. The letter of gift must include the following information:

The relationship between the donor and the borrower, and declare that no repayment is required.

The donor's name, address, and phone number are used to specify the financial value of the contribution.

The lender may offer you with a blank gift letter.Gift fund chart

Question markFrequently Asked Questions (FAQs)

Q. Are gift funds allowed on a VA loan?
A. Yes, provided the donor (person giving the gift money) is not a party to the transaction.

Q. Does the VA allow gift funds for reserves?
A. In most cases, the Veteran does not need cash reserves, however, the borrower must have 3 months of PITI documented for each property in order for the rental income to be considered if the borrower owns several properties.
Gift money are not permitted to be utilized to satisfy reserve requirements.
Chapter 4: Credit Underwriting

SOURCE: VA Pamphlet 26-7, Revised Chapter 4: Credit Underwriting

Conclusion

In conclusion, VA loan gift funds are a great way to help a veteran or military family purchase a home. The process is simple and there are many options for getting the money you need. Be sure to consult with a lender to find the best way to use your gift funds and get into your dream home!